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Dr. F., having been driven to sheer unholy madness by the mendacity, folly, and criminality of the Bush Administration, not to mention the uncouth, ungrammatical, and vacuous rhetoric of its principal, has retreated to a better but imaginary world.

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Thursday, October 30, 2008

Except for the excitement surrounding first beams in the LHC, particle physics has been an all-too-quiet subject recently. It looks like that may be about to change, with a dramatic new result announced by the CDF experiment this evening, in a preprint entitled Study of multi-muon events produced in p-pbar collisions at sqrt(s)=1.96 TeV.

Tuesday, October 28, 2008

Videos taken in the Assembly of God church in Wasilla, Alaska, which she used to attend, show her nodding as a preacher says that Alaska will be "one of the refuge states in the Last Days." For the uninitiated, this is a reference to a crackpot belief, widely held among those who brood on the "End Times," that some parts of the world will end at different times from others, and Alaska will be a big draw as the heavens darken on account of its wide open spaces. An article by Laurie Goodstein in the New York Times gives further gruesome details of the extreme Pentecostalism with which Palin has been associated in the past (perhaps moderating herself, at least in public, as a political career became more attractive). High points, also available on YouTube, show her being "anointed" by an African bishop who claims to cast out witches. The term used in the trade for this hysterical superstitious nonsense is "spiritual warfare," in which true Christian soldiers are trained to fight demons. Palin has spoken at "spiritual warfare" events as recently as June. And only last week the chiller from Wasilla spoke of "prayer warriors" in a radio interview with James Dobson of Focus on the Family, who said that he and his lovely wife, Shirley, had convened a prayer meeting to beseech that "God's perfect will be done on Nov. 4."

This is what the Republican Party has done to us this year: It has placed within reach of the Oval Office a woman who is a religious fanatic and a proud, boastful ignoramus. Those who despise science and learning are not anti-elitist. They are morally and intellectually slothful people who are secretly envious of the educated and the cultured. And those who prate of spiritual warfare and demons are not just "people of faith" but theocratic bullies. On Nov. 4, anyone who cares for the Constitution has a clear duty to repudiate this wickedness and stupidity.

Monday, October 27, 2008

In accord with the mores of the day, I am a believer in the benefit of cross cultural experiences. Speaking of Accords, I just bought one, and it came with a three month free subscription to XM radio. Now I probably haven't listened to much contemporary popular music for several decades now, so I figured that maybe I should try to catch up a bit. XM 20 plays top twenty songs (somebody's top twenty) all the time, so it was a perfect occasion.

One slight problem is that they start their cycle every morning approximately at the time I leave for work, so by the time I get there, they have only reached number eleven or so, so I may be getting a biased sample. As it happens, it seems music may have evolved a bit in the last few decades, so I'm a bit vague on the precise genres involved. Most of it sounds to my untrained ear like a cross between rock and hip hop.

I should mention one little problem that I have with music: it tends to get stuck in my head. This is not so bad if the music involved is Papageno's magic bells from The Magic Flute, or even Abba's Cassandra. T-Shirt or Fall for You, not so much. Most of it, fortunately, doesn't seem to leave much of an engram, but there is also some stuff I like: So What, for example.

One oddity that those more in tune with the contemporary scene might clear up for me: the voices sound funny - I suspect that they are digitally altered. Is that right? I asked my friend Lou about this, since he is a bit more tuned in than I. He suggested that I should ask Dr. M.

So, Dr. M., if you are listening, did you forget to teach some important stuff during your post doc? Not that I didn't appreciate the fluid dynamics stuff, but what about the music?

The recent discovery of x-ray scotch tape poses an interesting physics problem. It seems that the x-rays have an energy of up to 300 kev. This is a very large number compared to any binding energies encountered in ordinary atomic phenomena. Typical chemical bonds are hundreds of thousands of times smaller. Even an innermost electron of the highest Z atom has less than half that binding energy. So where does the energy come from?

My best guess: somehow the act of pulling off the tape turns some of the polymers into some kind of particle accelerators, perhaps by piling up charge in a smaller and smaller region. Anybody have a better idea?

Nouriel Roubini is the prophet of the great meltdown of 2008. He saw it coming, but like Cassandras mythical and real past, was ignored or derided. He thinks that the worst is yet to come: In the Times (London).

While the economic sun was shining, most other economists scoffed at Roubini and his predictions of imminent disaster. They dismissed his warnings that the sub-prime mortgage disaster would trigger a financial meltdown. They could not quite believe his view that the US mortgage giants Fannie Mae and Freddie Mac would collapse, and that the investment banks would be crushed as the world headed for a long recession.

Yet all these predictions and more came true. Few are laughing now.

What does Roubini think is going to happen next? Rather worryingly, in London last Thursday he predicted that hundreds of hedge funds will go bust and stock markets may soon have to shut – perhaps for as long as a week – in order to stem the panic selling now sweeping the world.

Sunday, October 26, 2008

American education has long been a fashion industry, usually with deplorable results. A currently surging notion is that of making algebra mandatory for all eighth grade students. A few good articles on the subject can be found here, here, here and here.

Algebra is a critical gateway to all of higher mathematics and therefore to science, technical skills, engineering, economics and business. The essence of algebra is abstraction, the manipulation of symbols in place of numbers (we are talking elementary algebra here). In the age of the calculator, this ability is far more useful and general than the merely calculational skills of elementary arithmetic.

Those arithmetic skills are not quite superfluous though. The algorithms learned there serve as models for their algebraic counterparts. Few can understand the abstract without being able to understand more concrete counterparts first.

The objection to eighth grade algebra is that a lot of students enter eighth grade without mastering the seventh, sixth, or even second grade skills of ordinary arithmetic. How can you follow the derivation of the roots of a quadratic equation if you can't compute with fractions and don't know what a square root is? It is pretty natural to doubt that students so unprepared can benefit from algebra.

The notion that all students can benefit from algebra is hard to doubt. But eighth grade algebra is one of those Procrustean ideas that, like no child left behind, will do as much or more harm than good. Some students are quite ready for algebra in sixth grade or earlier. Many others, unfortunately, never will be. Rather than throw sloganized non-solutions at students, we need to deal with the reasons they aren't learning the more elementary skills.

Some of those reasons are largely beyond the scope of the school. Some students are not bright. It's hard to focus on school when mom is in prison and dad is a crack whore. Other reasons are squarely the fault of the schools, and in particular I'm thinking of the last bad idea but one in math education, often called "math investigations." The key notion here is to forget about learning math facts like the multiplication tables and algorithms, and let students discover their own ways of soving problems.

American education has a long standing aversion to memorization in any form, and math is one of the places hardest hit by this particular error. The idea that "rote memorization" is bad is derived from the notion that memorization is not an acceptable substitute for understanding. Well, actually, sometimes it is. Every job requires a certain amount of memorization, and some jobs, like physician and lawyer, require a very great deal. Even more importantly, memory is an essential substrate for understanding. It can be pretty hard to make sense of history if you can't remember which of two interlinked events happened first. Memory is perhaps the most developed and fundamental of human intellectual qualities, and ignoring it is absurd. Behind every great folly there is a germ of truth, of course. Ignoring understanding and only relying on memorization is equally misguided.

From time to time I have worked with elementary school children on math or science. In many cases they are interested in the kinds of mathematical ideas I present (like how to calculate pi), but have trouble following because they don't know elementary addition or multiplication facts (like 7 + 9 or 4 x 5).

Math is the most sequential and hierarchical of disciplines. If you don't know addition, subtraction and multiplication are incomprehensible. If you don't know multiplication and division, you can't understand fractions, factors and factorization, primes, powers, or roots. Once you know those things, you are ready for algebra.

Saturday, October 25, 2008

Political winds are clearly blowing for the Dems this year. By most accounts, John McCain has run an execrable campaign, while Obama has run a near perfect one. So why, Republicans like to ask, is it still a race?

I think that there are about three main threads: conservatism still has powerful appeal to many, the abortion issue is the be all and end all for many (to borrow a phrase from the Sarracuda, and, most importantly, race. Most of the racist sentiment is concentrated in the oldest and least educated Americans, but by no means all.

The relentless popularization of the image of the black gangster culture plays a key role in this. So does the closely related phenomenon of black crime. Italian Americans long suffered from a similar identification. Very few Italian Americans were Mafioso, but the Mafia was (and presumably still is) real and overwhelmingly Italian.

Ethnic stereotypes are unfair, but they usually have at least some basis in culture. No doubt there are dumb Jews and lazy Asians, but the images of accomplishment are nearly as durable as the negative type.

The cure for the negative stereotype is its replacement by positive images, but the positive images have to be real, not fake. Obama is very smart, well-organized, and appears to be tempermentally suited for high responsibility. If he is elected, and is even reasonably successful in the very difficult times we now face, he will change a lot of white prejudice quickly. Even more important, he will change a lot of black people's images of themselves.

Neither of these last two facts is the reason I voted for Obama - I voted for him because I think he is far more qualified than his erratic, impetuous and dishonest opponent. They would certainly be a nice bonus though.

No doubt this will come as a shock to regular readers, but I am endorsing Barack Obama for President.

Obama has a lot of good qualities, but probably more important is the fact that his opponent is an idiot. Much has been made in the liberal blogosphere about the disreputable and dishonest campaign McCain has conducted, but of more import to me is his impetuous stupidity. McCain's odd and ill-considered choices, most notably the way he chose his Vice President, confirm a lot of things long known and suspected: his vanity, his gamblers recklessness, his lack of intellectual depth and rigor. Such traits are relatively minor nuisances in a Senator or Representative, where a few hotheads are surrounded by many more cautious souls. In a President, they are disastrous.

We just saw this movie, folks. If we do it again, the survival of the Republic may be at stake.

Now what was it again that made us nervous about unregulated free markets?

“This is a panic in the way of the fine 19th-century panics, where we all run around like headless chickens,” said R. Jeremy Grantham, chairman of the Boston-based investment firm GMO, who had predicted stocks would tumble. “I have been in the business for 40 years, and I have never seen anything like this.”

Thursday, October 23, 2008

Facing a firing line of questions from Washington lawmakers, Alan Greenspan, the former Federal Reserve chairman once considered the infallible maestro of the financial system, admitted on Thursday that he “made a mistake” in trusting that free markets could regulate themselves without government oversight.

*snip*...

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

Better to see the error of one's ways, and be shocked, than to live in the usual sea of denial.

Josh Marshall finds that the McCain campaign reminds him of that famous dictum of nineteenth century embryology: Ontogeny recapitulates Phylogeny. (development replays evolution).

And yesterday I had an political epiphany. As the McCain campaign staggers toward its conclusion, with electoral columns and pediments standing since 1966 buckling under their weight, the party seems to be cycling back through its history of character assassination, McCarthyism and wedge politics flimflam, only now with an desperate and parodic impotence taking the place of punishing rhetorical violence.

Southern strategy race-baiting, check! Hyper 9/11ist 'the Dems are terrorists' character assassination, check! Rep. Michelle Bachmann's neo-McCarthyite manifesto and call for a new HUAC, check! 'The Democrats want to bring socialism to America', check! Who lost Georgia? Aspirational neo-Cold Warism, check! Mix these in with a general stew of 70s-90s soft-on-crime, Dems are pedophile weirdo-freak-loser wedge politics and we've basically got the full ground covered.

Well, OK, but after I thought about it for a minute, I was reminded of the fiery end of the shape-shifting T-1000 in Terminator II. After terrorizing our heroes in a variety of forms during the movie, he falls or is pushed into a pool of red hot molten iron. As he struggles, each time he goes under he re-emerges in another one of his guises until at last his computer is melted and he returns to atoms.

Sunday, October 19, 2008

And now I guess the message this week is we're going to call him a socialist. Mr. Obama is now a socialist, because he dares to suggest that maybe we ought to look at the tax structure that we have. Taxes are always a redistribution of money. Most of the taxes that are redistributed go back to those who pay them, in roads and airports and hospitals and schools. And taxes are necessary for the common good. And there's nothing wrong with examining what our tax structure is or who should be paying more or who should be paying less, and for us to say that makes you a socialist is an unfortunate characterization that isn't accurate.

Reagan and Bush gave us sixteen years of redistributing wealth to the rich from everybody else. It is time for another look.

It is a sacred principle of American Conservatism that "people" know better how to spend their money than the government does. Like most such principles, this one has a reductio ad absurdum - no government whatsoever.

Tom Friedman, appearing on ABC's "This Week," noted that the next President, if he has any sense, will need to put in place a large stimulus package to deal with what is likely to be a very large recession. He thinks we should pay attention to what we spend it on, and notes the following (my paraphrase). We had a railroad bubble in the nineteenth century, but we got this great rail system out of it, we had dot com boom in the 90's and got this great internet out of it, and we had a financial services bubble in the most recent decade, and all we got out of it were empty condos in Florida and a bunch of used Gulfstream jets.

The fact is, the government often can spend better. The historically central components of our national infrastructure were mostly built by the government or with its help. Our highway system, our railroads, our communication infrastructure, and our educational and scientific systems were all built by or heavily subsidized by the government.

This is not an isolated fact of American life, but a general principle in the lives of all nations. The libertarian ideal is perhaps not entirely untested, but there is nowhere it has proven successful.

Saturday, October 18, 2008

I'm a pessimist by nature. That's why, when Pollster.com sees a narrowing Obama lead, I get really depressed. Grover Norquist and his anti-government fanatics that control the Republican Party have nearly succeeded in destroying the country and our economy, but a very large fraction of the American people still can't connect cause and effect. Stupidity, racism, and lies are still a potent combination, especially among old people in the West, South, and Appalachia.

It's possible that Obama's legendary cool is becoming a handicap. I know that he has to avoid the "angry Black Man" image, but I would have been more reassured if he had blasted back at McCain just a little in the debate.

Paul Krugman quotes James Galbraith on the nonsensical memes being promoted by the POS:

An amazing debate at National Journal. The journal asked, is there room for fiscal stimulus to respond to the crisis caused by the mortgage mess. David Walker, who’s been preaching the need to rein in entitlements, treated the crisis as a chance to push his favorite line:

My concern is, when will Washington wake up and start doing something to defuse the potential “super sub-prime crisis” associated with the federal government’s deteriorating finances and imprudent fiscal path?

And Jamie let loose:

What is Mr. Walker’s approach to subprime crisis today? His comment above makes his approach clear. It is to use the crisis as a rhetorical springboard, in order to divert the conversation back to what he calls the “super sub-prime crisis associated with the federal government’s deteriorating finances…” But the fact is, the subprime crisis is real. The collapse of interbank lending is real. The collapsing stock market is real. The disintegration of the financial system is real. The collapse of the housing sector is real. The credit crunch and the recession are real. You can see this in the interest rate spreads and in the credit that is unavailable at any price.Mr. Walker’s “super subprime crisis” of the federal government is not real. It is a pure figment of the imagination. It is something Mr. Walker sees in his mind’s eye. He sees it in his budget projections. He sees it in his balance sheets, which are the oddest balance sheets I’ve ever seen, because they have all liabilities and no assets.

Well, I voted. I could have just blacked in the straight Democratic Party oval, but I preferred to individually vote against all those rotten Republicans. It was a long ballot, with a bunch of these stupid "retain Judge Blank" votes and amendments and bond issues galore, and I had to wait a long time - I could have voted absentee, but I like the "roar of the greasepaint and the smell of the crowd."

Unfortunately, I, who take a book everywhere but the shower, forgot to bring a book.

Friday, October 17, 2008

A self-deluding person might choose to pretend some part of his or her expenses didn't really exist - credit card debt, for example. Some might think that our late investment banks did something similar. So does the United States government. In particular, it has a few tricks to make deficits appear smaller than they are, like considering some expenses off budget (Bush's wars) and money borrowed from Social Security and other trust funds. The annual deficit also depends on whether you use the fiscal year or the calendar year as a basis. For that reason, I like to just look at the gross National Debt, which the government tracks to the penny, day by day.

If you look at the chart in the first link, or the numbers from the second, you can see that there is only one period during the last twenty years when the debt actually decreased was a brief period correspondly roughly to Bill Clinton's last year in office. At the end of Clinton's last calendar year in office (12/29/2000 - Saturday's and Sunday's not computed), the National debt was $5,776 billion. At the end of the previous year, (12/31/1999) the debt was $5,776 billion - so the decrease for the period was $114 billion - a decrease of $400 or so for each American. Choose slightly different dates and the amounts can move fairly drastically.

Look next at the last year for which data exists: 16 Oct 2007 to 16 October 2008. During this period, the national debt increased from $9,058 billion to 10,333 billion - an astounding increase of $1.273 trillion. Nearly 13% of the total national debt was accumulated in the past year. 75% of the total national debt for all of American history was accumulated during just three Presidencies: Reagan, Bush I and Bush II.

UPDATE: A word or two about where all that new debt is going. Much of it is being used to lend money to banks that everybody else is afraid to lend money to. Some more is being used to buy stock in banks that the rest of the world is afraid to buy stock in. We are more likely to get some of it back than if we had bought another war with it or given it to a bunch of rich people.

John Conway of Cosmic Variance reports that the damage to the Large Hadron Collider (LHC) was even more severe than so far reported. He links to this CERN Report:

INTERIM SUMMARY REPORT ON THE ANALYSIS OF THE 19 SEPTEMBER 2008 INCIDENT AT THE LHC:...Inspection and diagnostics After restoring power and services in the tunnel and ensuring mechanical stability of the displaced magnets, one proceeded to open the cryostat sleeves in the interconnections between magnets, starting from subsector 23-25. This confirmed the location of the electrical arc, showed absence of electrical and mechanical damage in neighboring interconnections, but revealed contamination by soot-like dust which also propagated in the beam pipes over some distance. It also showeddamage to the multilayer insulation blankets of the cryostats. The number of magnets to be repaired is at maximum of 5 quadrupoles (in Short Straight Sections) and 24 dipoles, but it is likely that more will have to be removed from the tunnel for cleaning and exchange of multilayer insulation. The exact numbers will be known once the ongoing inspections are completed. Spare magnets and spare components appear to be available in adequate types and sufficient quantities for allowing replacement of the damaged ones during the forthcomingshutdown. The extent of contamination to the beam vacuum pipes is not yet fully mapped, but known to be limited; in situ cleaning is being considered to keep to a minimum the number of magnets to be removed. The plan for removing/reinstallation, transport and repair of magnets in sector 3-4 is being established and integrated with the maintenance and consolidation work to be performed during the winter shutdown. The corresponding manpower resources have been secured. . .

. . . it is easy to sketch out a scenario in which he could be a great president. He would be untroubled by self-destructive demons or indiscipline. With that cool manner, he would see reality unfiltered. He could gather — already has gathered — some of the smartest minds in public policy, and, untroubled by intellectual insecurity, he could give them free rein. Though he is young, it is easy to imagine him at the cabinet table, leading a subtle discussion of some long-term problem.

Wednesday, October 15, 2008

Well, look, I really - uh - hated this stupid debate. Schieffer fought valiantly to be as bad as Gibson and Ifill and largely succeeded. Obama was maddeningly boring as he stuck to his rope-a-dope strategy and refused to confront McCain. McCain at least grappled and attacked, though I suppose the most entertaining feature was trying to find six differences between his head and the Great Pumpkin - that and wondering whether his head was going to explode.

The big gooey puffballs Schieffer served up didn't challenge either candidate's talking points with anything as disreputable as a specific, though McCain did a better job of getting his foot stuck to his ear in them.

Cristopher Hitchens in not someone I often agree with, but he does have one undeniable talent: wordcraft. It seems that Sarah Palin has now lost Hitchens:

The most insulting thing that a politician can do is to compel you to ask yourself: "What does he take me for?" Precisely this question is provoked by the selection of Gov. Sarah Palin. I wrote not long ago that it was not right to condescend to her just because of her provincial roots or her piety, let alone her slight flirtatiousness, but really her conduct since then has been a national disgrace. It turns out that none of her early claims to political courage was founded in fact, and it further turns out that some of the untested rumors about her—her vindictiveness in local quarrels, her bizarre religious and political affiliations—were very well-founded, indeed. Moreover, given the nasty and lowly task of stirring up the whack-job fringe of the party's right wing and of recycling patent falsehoods about Obama's position on Afghanistan, she has drawn upon the only talent that she apparently possesses.

At The New York Times, where Mr. Krugman is an op-ed page columnist, and at Princeton University, where he is a professor of economics, co-workers of the newly-minted Nobel laureate were reportedly bracing for the worst.

"I think it's safe to say that Paul had pretty high self-esteem before the Nobel thing went down," said one of Mr. Krugman's Princeton associates, who spoke on condition of anonymity. "But now he's walking around like he's Jay-Z or something" . . .

Tuesday, October 14, 2008

Lumo has a post on Krugman's Nobel that starts- Well, I have no idea what are the important insights that Krugman is supposed to have discovered ...

That would have been a good place for one to stop, if one wanted to avoid spouting meaningless drivel. Lubos, of course, can't resist playing the fool, so he goes on to invent some notion of what might have been Krugman's work, but wasn't.

Meanwhile, featured commenter Rae Ann, with no more knowledge but perhaps better intuition, jokes that the stock market jumped because Krugman got the prize. Actually, it jumped because Paulson junked his original plan and went with the one the Krugman, and many other academic economists, preferred.

We should not kid ourselves that we are now out of the woods. We might have passed the first hazard, but plenty more await. Catastrophe may have been narrowly averted, or not.

Monday, October 13, 2008

Paul Krugman on how a smart guy like Henry Paulson managed to screw up the response to the financial meltdown:

It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.

I also wonder how much the Femafication of government under President Bush contributed to Mr. Paulson’s fumble. All across the executive branch, knowledgeable professionals have been driven out; there may not have been anyone left at Treasury with the stature and background to tell Mr. Paulson that he wasn’t making sense.

Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.

(hat tip, Kevin Drum commenter)

The FEMAfication refers, of course, to the disastrous Federal Emergency Management Agency (FEMA) response to Katrina under unqualified political appointees.

One useful (but unpopular) thing a President Obama could do would be to get rid of 95%, or better, 99%, of the thousands of political appointees every president chooses and replace them with career professionals.

Nothing like that could happen under McCain, of course. Sarah Palin proves that the Republican party remains, to borrow another Krugman phrase, "the Party of stupid."

The problem with Republicans is that their ideology keeps colliding with reality, and with that, colliding with the opinions of knowledgeable experts. Their response has been to proclaim that expertise doesn't matter. On dozens of subjects from foreign policy to economics to evolution to the environment, Republicans have chosen their gut over the brains of the experts. We are reaping the fruits.

Paul Krugman Wins Economics Nobel:Paul Krugman, a professor at Princeton University and an Op-Ed columnist for The New York Times, was awarded the Nobel Memorial Prize in Economic Sciences on Monday.

“It’s been an extremely weird day, but weird in a positive way,” Mr. Krugman said in an interview on his way to a Washington meeting for the Group of Thirty, an international body from the public and private sectors that discusses international economics. He said he was mostly “preoccupied with the hassles” of trying to make all his scheduled meetings today and answer a constantly-ringing cell phone.

Mr. Krugman received the award for his work on international trade and economic geography. In particular, the prize committee lauded his work for “having shown the effects of economies of scale on trade patterns and on the location of economic activity.” He has developed models that explain observed patterns of trade between countries, as well as what goods are produced where and why. Traditional trade theory assumes that countries are different and will exchange different kinds of goods with each other; Mr. Krugman’s theories have explained why worldwide trade is dominated by a few countries that are similar to each other, and why some countries might import the same kinds of goods that it exports.

Apparently both McCain and Obama have suggested that Warren Buffet might be a good Secretary of the Treasury. I won't detail why this might be a bad idea, but I will suggest an alternative: Buffy the Vampire Slayer.

Tyler Cowen:

Hypotheses which are too simple to be true as stated:We need a new banking system. A new banking system takes years to build. We will be in an economic downturn for years and because this crisis is global it will not be better than Japan in the 1990s. It is hard to build a new banking system through the current, old, nearly insolvent banking system. Maybe some smart person has a plan to build a new banking system through the old system, while avoiding toxic contamination through the problems of low-solvency institutions. That smart person remains silent. I have not given up hope. The Great Depression had bank failures, we have bank zombies.

I live in a small Southwestern American city where more than 60% of the people speak Spanish at home. So how well does this work out? (As seen from the perspective of a monolingual Anglo from a Northwestern State).

Pretty darn well, actually. I don't want to portray us as some sort of post-ethnic paradise, but we go to the same churches, and our children go to the same schools and play on the same football, basketball, soccer and baseball teams. Our politicians, including the mayor, have been black, white, and Hispanic. Our neighborhoods are integrated and we intermarry.

Partly this is a matter of tradition. Our town has been majority Hispanic since its founding, but Buffalo Soldiers joined the mix well over a hundred years ago and a steady stream of immigrants from the rest of the US has joined with other immigrants from Mexico.

When we got here, it was a source of some amusement to us that there were old-line Spanish speaking families here with Norwegian, Sikh, German and English family names. We got used to it.

As I say, it's not a post-ethnic paradise. There are tensions, and there are gangs in the schools, and there is gang violence - fortunately not at big city levels. There is significant separation on economic lines, and the flood of mostly wealthy, old, and white recent immigrants has upset some balances of power. Fortunately, most of those with ethnic chips on their shoulders have been kind enough to stay away.

Saturday, October 11, 2008

Lou Dobbs and a few other Bozos are now calling for a stock market holiday - or maybe a broader market holiday. During this holiday the feds are supposed to buy into the banks, set up a credit default swap clearinghouse and insure the hell out of practically everybody. Haven't seen much serious economic analysis on this.

Meanwhile, it looks like the G7 decided to punt. That should make for fun.

There is tremendous irony in the fact that George W Bush, probably the most conservative president since Hoover, is now on the brink of presiding over the greatest socialistic takeover in American history. Modern economists are nearly universal in their dislike of most types of socialism, but they are also nearly unanimous in thinking that something like a partial nationalization of banks is necessary. The difficulty is that the current crisis has overwhelmed all the conventional tools of monetary policy - there just doesn't seem to be anything else left.

There is an occasional nutbag economist that thinks we can just let the market sort it out. His colleagues overwhelmingly think that the result would be an economic collapse - a cascading tide of businesses going bankrupt, people losing homes and savings, and unemployment skyrocketing. This would be Andrew Mellon's "liquidate everybody" scenario. We know how it played out in the Great Depression, and the far greater interdependence of the world today suggests that it might be worse this time. Mulligan's definition of success is that once the Chinese and Saudis see how cheap everything is (as a result of the collapse), they will come in and buy up enough stuff to restart the economy. Now there's a big hooray.

So why throw money at banks? They are more guilty of creating this mess than anybody else. The short answer is that you need to thaw out the pipes where they are frozen - thawing out those that haven't frozen yet won't help.

Ordinary Americans are already hurting, of course, and the pain is extremely likely to get much worse before it gets better. Obama has suggested cutting capital gains taxes for small businesses and offering them government insured loans. Cutting capital gains taxes is not likely to help much, since the profitable and growing companies are in less trouble anyway.

Government guaranteed loans, expanded unemployment credit, and depression style government employment programs are all at least a bit socialistic, but does anybody have a plausible alternative?

McCain's "buy rotten mortgages" from banks and readjust the terms plan is a pure giveaway to the banks who made the bad loans and the people who took them out - an open invitation for the next raid on the treasury.

One of the lies being promoted by Fox News, McCain, and the rest of the right wing noise machine is that Barney Frank, in some kind of collusion with Fanny Mae and Freddy Mac, created the sub-prime mortgage mess. Like every good lie, there is a crumb of truth surrounded by vast distortion. That crumb of truth is that Fanny and Freddy did jump on the subprime bandwagon but only after it had already exploded. The legislation that permitted that, however, was passed during Republican control of congress. The other crumb of truth is that Fannie and Freddy were cozy with congress, but that coziness that benefitted many members of both parties, but mainly Republicans.

The Republican myth forgets many crucial details, including the fact that the subprime explosion started long before F&F got involved, was dominated by private lenders, that Barney Frank sponsored legislation to regulate F&F (which was killed by Republicans) and that the subprime mess was, is, and will continue to be centered outside F&F.

The current meltdown started with the purely private (and unregulated) investment banks and their problems stem from their own errors and greed, not from F&F.

Perhaps you, like I, noticed that my name was once again absent from the list of Nobel Prize honorees. I personally attribute this to the short-sightedness and jealously of the Prize committee members, plus the fact that I have a funny name. I guess I could concede that the fact that I haven't discovered anything important might be a minor contributing factor.

It's discouraging enough that I probably won't be able to discover anything important this year either.

If you can keep your headwhen all about you are losing theirs,you probably just don't understandthe gravity of the situation.

Few things are more disorienting than suddenly finding that things were not what they seem. Walking in the dark and discovering in the most shocking way possible that that shadow on the ground was really a swimming pool, for example, or saving diligently for many years only to see the value of your 401K evaporate almost overnight.

It's pretty dismaying, too, to see Americans whipped into a violent rage by demagogues wielding innuendo, slander and fear. That was supposed to happen "elsewhere" - in benighted foreign lands without our advantages and traditions. The root, though, is fear. Seeing your job, retirement, or living crumble before your eyes is much more profoundly disorienting than that cold night splash in the pool.

In that disorientation of panic, it's all too easy to turn that fear into rage, and unscrupulous politicians have always been quick to turn that rage and fear to their advantage. That's what happened in the former Yugoslavia, in Rwanda, in Nazi Germany, and that's what has been happening the present political campaign.

As in most cases of Doom Foretold, there really are people to blame: greedy bankers, lax regulators, politicians too cozy with lobbyists, and cocky economists who were sure that they had the tools to fix anything that might go wrong. The web of guilt is wider too: anybody who got used to living on cheap borrowed money is a direct contributor to the problem, because it is the sudden disappearance of that cheap borrowed money that translates the financial crisis down to the real, mainstreet economy.

Unfortunately that's a wide web indeed, including banks, global corporations, small businesses, individuals who used their mortgages as piggy banks, and, above all, the government.

"Reagan proved deficits don't matter" said Cheney. He also supposedly proved that understanding what the hell was going on was a luxury in the Nation's chief executive. Reality always has its revenge though, and now we and our children get to live through it.

He is still an idiot because he can't reconcile his admiration for Obama and his continuing delusion that McCain is "presidential timber." More like "presidential tinder" - a conflagration waiting to happen.

Alan Greenspan is the unfortunate position of having gone from acclaimed sage to one of history's great screwups in the past couple of years. I might even be sympathetic if he hadn't cost me so much money.

Peter S. Goodman, writing in today's New York Times, has a long analysis of how influential Greenspan was in the rise of the unregulated derivatives market. Greenspan, the Ayn Randian free market fundamentalist was, and still apparently is, convinced that regulation of derivatives was a bad idea. One of the problems we have today is that this vast market in derivatives dwarfs the value of the underlying assets.

The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Theoretically intended to limit risk and ward off financial problems, the contracts instead have stoked uncertainty and actually spread risk amid doubts about how companies value them.

Not all these derivatives are related to the mortgage market, but consider the fact that the total "value" of all these derivatives is nearly 50 times the value of all US mortgages. It seems to me that anyone who could not see a potential problem here is hopelessly blind.

Greenspan has his own ideas of course:

The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as “the pharmacist who fills the prescription ordered by our physician.”

We regulate pharmacists rather strictly of course. I guess that it didn't occur to Mr. Greenspan that a policy that depended on investment bankers not getting greedy might have an underlying problem.

While Greenspan, Robert Rubin, and the rest of Wall Street campaigned relentlessly against regulation, some wiser heads were not fooled:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”

And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

I think we can now see pretty clearly who was right and who was deluded. I strongly recommend the whole article.

Wednesday, October 08, 2008

I normally avoid Larry King, if not quite like the plague, at least like a nasty cold, but I caught Michelle Obama on the show tonight. Very thoughtful, deep, and amazingly cool, just like her husband.

Monday, October 06, 2008

OK, "drill, baby, drill" is just stupid. But now that McCain and Palin have their crowds shouting "terrorist" and "kill him" at the mention of Obama's name, it's time for every decent American to condemn them and the contemptible, dishonest campaign they have run.

Just when the Europeans were busy congratulating themselves on escaping the financial blunders of the US, they found themselves sucked into the same financial vortex.

The ECB policy was self-defeating, even on its own terms. It merely drove headline inflation even higher, while deeper forces of underlying debt deflation pulled the real economies of Germany, Italy, France, and Spain into a recessionary vortex.

Far from offering reassurance, the weekend mini-summit of EU leaders served only to highlight that nobody is in charge of this runaway train. There is still no lender of last resort in euroland. The £12bn stimulus package is risible.

Angela Merkel has revealed her deep limitations. It was she who vetoed French efforts to launch a pan-EU rescue package, suspecting that any lifeboat fund would prove to be Trojan Horse – a way of co-opting German taxpayers into colossal transfers of wealth to Latin Europe.

In that she is right, but it is too late now for dysfunctional EU political games. By demanding that those who caused the damage should pay for it, she crossed the line into caricature, or worse.

UPDATE/CLARIFICATION: The title is a play on that of an article in the German press reported by Bee.

Sunday, October 05, 2008

Charles Krauthammer is a fervent neocon who rarely has a good word for any Democrat, but he said:

Oliver Wendell Holmes Jr. famously said of Franklin Roosevelt that he had a "second-class intellect, but a first-class temperament." Obama has shown that he is a man of limited experience, questionable convictions, deeply troubling associations (Jeremiah Wright, William Ayers, Tony Rezko) and an alarming lack of self-definition -- do you really know who he is and what he believes? Nonetheless, he's got both a first-class intellect and a first-class temperament. That will likely be enough to make him president.

I don't agree with most of the negative parts, but first class mind and temperament are crucial. My table of the qualities for Presidents that I remember:

..............................Intellect............Temperament

Kennedy 1.3 1.4

Johnson 2.1 2.2

Nixon 1.2 2.7

Ford 2.0 2.1

Carter 1.5 2.5

Reagan (1) 2.0 1.0

Reagan (2) 3.5 1.2

Bush I 1.5 2.0

Clinton 1.0 1.9

Bush II 3.0 3.0

McCain 2 4

Obama 1 1

Temperament is more important than usually considered. Of course there are other factors as well, especially character, which brought down Nixon and spoiled Clinton's place in history. My reading is that a first class temperament is more important than a first class intellect - a second will do, mostly. Reagan's temperament bailed him out of most problems, except when his intellect was really crumbling in his second term.

Like the Bushes, especially junior, Sarah Palin speaks a language only distantly related to English. The words look like English, but the grammar and logic don't compute.

I'm not going to solely blame all of man's activities on changes in climate

A muddled syntax bespeaks a muddled mind, as one of my English teachers might have said. A less prescriptive critic claimed that Bush mainly muddled when he was lying - though I'm not sure where he found the negative examples.

At Sarah Palin’s old church in Wasilla, they spoke in tongues. Maybe that’s where she picked it up.

...

With her pompom patois and sing-songy jingoism, Palin can bridge contradictory ideas that lead nowhere: One minute she promises to get “greater oversight” by government; the next, she lectures: “Government, you know, you’re not always a solution. In fact, too often you’re the problem.”

Talking at the debate about how she would “positively affect the impacts” of the climate change for which she’s loath to acknowledge human culpability, she did a dizzying verbal loop-de-loop: “With the impacts of climate change, what we can do about that, as governor, I was the first governor to form a climate change subcabinet to start dealing with the impacts.” That was, miraculously, richer with content than an answer she gave Katie Couric: “You know, there are man’s activities that can be contributed to the issues that we’re dealing with now, with these impacts.”

At another point, she channeled Alicia Silverstone debating in “Clueless,” asserting, “Nuclear weaponry, of course, would be the be-all, end-all of just too many people in too many parts of our planet.” (Mostly the end-all.)

A political jukebox, she drowned out Biden’s specifics, offering lifestyle as substance. “In the middle class of America, which is where Todd and I have been, you know, all our lives,” she said, making the middle class sound like it has its own ZIP code, superior to 90210 because “real” rules.

Sometimes, her sentences have a Yoda-like — “When 900 years old you reach, look as good you will not” — splendor. When she was asked by Couric if she’d ever negotiated with the Russians, the governor replied that when Putin “rears his head” he is headed for Alaska. Then she uttered yet another sentence that defies diagramming: “It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there.”

Reared heads reared themselves again at the debate, when she said that Fannie Mae and Freddie Mac “were starting to really kind of rear the head of abuse.”

She dangles gerunds, mangles prepositions, randomly exiles nouns and verbs and also — “also” is her favorite vamping word — uses verbs better left as nouns, as in, “If Americans so bless us and privilege us with the opportunity of serving them,” or how she tried to “progress the agenda.”

Poppy Bush dropped personal pronouns and launched straight into verbs because he was minding his mother’s admonition against “the big I.” Palin, by contrast, uses a heck of a lot of language to praise herself as a fresh face with new ideas who has “joined this team that is a team of mavericks.” True mavericks don’t brand themselves.

The original "original Maverick", you might recall, was a Texas rancher who didn't brand his cattle, reputedly because that allowed him to scoop up his neighbor's as yet unbranded calfs.

The most devastating parts of the story come from fellow Naval officers, including one from a fellow POW who, unlike McCain, never broke under Vietnamese torture and signed confessions of war crimes. In these stories McCain, before and after Vietnam, is more interested in chasing tail than serving his country.

This story is counterweight to the ritual panegyrics to the "hero" in the mainstream media, but also a revealing portrait of the warts on the man who would be king. Is it even-handed? Hardly. Is it fair? I don't know, but given the garbage he has been spewing, it is deserved.

Saturday, October 04, 2008

Stephen Labaton of the New York Times finds a big gun in the hands of the SEC, and smoke is pouring from the muzzle:

. . . decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

The banks got their rule change, and jumped at it. In return, the SEC got some power to restrict their risk taking. Unfortunately, they didn't pay enough attention to actually use it.

The supervisory program under Mr. Cox, who arrived at the agency a year later, was a low priority.

The commission assigned seven people to examine the parent companies — which last year controlled financial empires with combined assets of more than $4 trillion. Since March 2007, the office has not had a director. And as of last month, the office had not completed a single inspection since it was reshuffled by Mr. Cox more than a year and a half ago.

...

The commission’s decision effectively to outsource its oversight to the firms themselves fit squarely in the broader Washington culture of the last eight years under President Bush. . .

"We foolishly believed that the firms had a strong culture of self-preservation and responsibility and would have the discipline not to be excessively borrowing,” said Professor James D. Cox, an expert on securities law and accounting at Duke School of Law (and no relationship to Christopher Cox).

"Letting the firms police themselves made sense to me because I didn’t think the S.E.C. had the staff and wherewithal to impose its own standards and I foolishly thought the market would impose its own self-discipline. We’ve all learned a terrible lesson,” he added . . .

Christopher Cox had been a close ally of business groups in his 17 years as a House member from one of the most conservative districts in Southern California. Mr. Cox had led the effort to rewrite securities laws to make investor lawsuits harder to file. He also fought against accounting rules that would give less favorable treatment to executive stock options.

A very worthwhile article. Even though it looks like McCain got it right about Chris Cox's culpability, this is a problem for him, because it clearly refutes the Republican philosophy of deregulation that he and essentially all Republicans since Reagan have championed.

One key gauge of credit market "stickiness" is the so-called TED spread - the difference between interest rates on 3 month London interbank loans and 3 month US Treasury bills. James Hamilton has an exceptionally lucid explanation (Understanding the TED spread) of the financial significance of the TED spread and its relationship to underlying financial market dynamics. Highly recommended for the econo-geek or anyone else who just likes to know how the world works.

You really need to read the whole article, but he finishes by relating the current crisis to future developments, and the increasingly scary world out there:

. . . Here's the next shoe that could drop: the financial dislocations could lead to a perception by global investors that the U.S. is no longer a safe place to be putting their capital, which could add a currency crisis component to the present financial turmoil. Greg Mankiw notes this report:

China's government moved to calm financial markets Thursday and denied a report that it had ordered mainland banks to curb lending to U.S. banks, a day after rumors of financial stability led to a run on a Hong Kong institution.

Calm again for the time being, I guess. But if a cut in the fed funds rate leads to rapid dollar depreciation and commodity inflation, it could be pulling the trigger on something even scarier than what we've seen so far.

Not an attractive set of options on the menu for the FOMC.

The thought that Captain Hothead and the Prom Queen Ditz could be running the nation when these s***storms are hitting scares the hell out of me.

Thursday, October 02, 2008

Phone call: Madam Vice-President, the United States has just been attacked, and the President McCain's plane is missing. We have weak evidence that China carried out the attack, but China claims it was actually Iran, what should we do next.

VPOTUS: In Alaska, I took on the oil companies. We will use petroleum products to clean up the environment and end global warming. And all the hockey moms will stand with me against this new threat to our company.

Wednesday, October 01, 2008

I know I've been pretty hard on Sarah Palin. I've said that I think she's unprepared for the Presidency; I've made fun of the idea that she learns about other nations through osmosis; I've even questioned her energy expertise. I take it all back. I eat my words. I was wrong:

To see why, you have to watch the linked clip from Couric's interview.

BTW, I don't think I have ever said anything bad about Katie Couric, but for all those who have, her Palin interviews may be among the great journalistic deeds of recent memory.